Thailand GDP Growth Strongest In 4 Years In Q2

Thailand’s GDP expanded 3.7 percent from a year earlier in the June quarter of 2017, compared to a 3.3 percent growth in the first quarter 2017 and above market expectations of a 3.2 percent expansion. It is the strongest growth rate since the first quarter of 2013, amid higher exports and robust farm, tourism and retail output.

In the three months to June, private consumption growth moderated to 3 percent, compared to 3.2 percent in the prior quarter. The result was partly due to higher agricultural income from an increase in major crops production along with expansion in personal loan and improving of the consumer confidence index, as well as a lower inflation rate. This was offset by continued deceleration in expenditure on semi-durable goods and net services.

Government spending grew 2.7 percent, greatly accelerating from a 0.3 percent rise in the March quarter. This acceleration was mainly driven by marked increases in compensation of employees, consumption of fixed capital and social transfers in kind in form of goods & services.

Gross fixed capital formation went up by 0.4 percent, compared to a 1.7 percent growth in Q1. Public investment decreased by 7 percent, following a 9.7 percent increase in Q1 due to a contraction in construction, alongside a slowdown in machinery and equipment investment. On the contrary, private investment rebounded (+3.2 percent from -1.1 percent in Q1), due to expansions in construction, and machinery and equipment.

Exports of goods and services grew by 6 percent, accelerating from a 2.7 percent increase in the first quarter. Imports of goods and services rose 8.2 percent (from 6.1 percent in Q1).

On the production side, the agriculture sector rose 15.8 percent, much faster than a 5.7 percent expansion in the March quarter. The rise was supported by agriculture, hunting and forestry (17 percent from 6.3 percent in Q1) and fishing (2.4 percent from 0.8 percent). The non-agricultural sector expanded by 2.7 percent, compared to a 3.1 percent increase previously. Growth in the sector eased for: manufacturing (1 percent from 1.3 percent in Q1), health and social work (3.9 percent from 4.1 percent), and other community, social and personal services activities (5.8 percent from 6.4 percent). Sectors that moved into contraction include: electricity, gas & water supply (-1.4 percent from 1.9 percent), and construction (-6.2 percent from 2.8 percent). Meanwhile, mining & quarrying declined further (-7.6 percent from -5.6 percent) as did "private household with employed persons" (-2.7 percent from -0.2 percent). On the other hand, faster increases were seen for wholesale and retail trade (6 percent compared to 5.9 percent in Q1), hotels and restaurants (7.5 percent compared to 5.3 percent), transportation (8.6 percent compared to 5.4 percent), financial intermediation (5.1 percent compared to 4.6 percent), real estate (4.1 percent compared to 4 percent) and education (0.4 percent compared to 0.2 percent).

For 2017, Thailand's economic planning agency (NESDB) revised its growth forecasts higher to between 3.5 to 4.0 percent, compared to the 3.3 to 3.8 percent range it forecast previously. Exports in the year are projected to rise 5.7 percent, compared to a 3.6 percent increase in its previous forecast.

In 2016, the economy grew by 3.2 percent, faster than an upwardly revised 2.9 percent growth in 2015.

On a quarter-on-quarter seasonally adjusted basis, the economy advanced 1.3 percent in Q2 of 2017, the same as in the prior quarter. It was the fastest quarterly growth since the December quarter 2012.

NESDB | Charles | charles@tradingeconomics.com8/21/2017 11:36:38 AM

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